ExRo Looks to Wind to Generate Profit

The Vancouver-based startup has developed a generator specifically for wind, tidal power and other forms of alternative energy, and is seeking its first round of funding to begin field trials in March.

Think of wind-turbine innovation and new blades are likely to come to mind, or perhaps a new gearbox.

But a low-key startup called ExRo Technologies Inc. is approaching wind power from a different direction – the lowly generator.

Most wind turbines today use regular generators, which require a steady turning speed to effectively produce electricity. But wind blows at a wide variety of different speeds. As the shaft turns at different speeds based on the way the wind is blowing – and the blades are turning – the gearbox works to smooth out the large variation and deliver a steadier signal to the generator (see the Danish Wind Industry Association's description of wind turbine components here).

Essentially, a single-speed generator converts only a portion of the available wind into electricity, ExRo CEO John McDonald said.

"You pay a lot for all those things it takes to convince the generator it's stable power," he said. "It's not. And all these things add up because you reduce the amount of money you can make from the wind turbine. That that's a big deal because there's not enough coming out of the turbines to make it really economically viable."

ExRo hopes to change that. The Vancouver-based company has invented a new type of generator – specifically designed for green energy such as wind or tidal power – that can handle variable loads. The company claims its generator can help pull more than 50 percent more electricity out of the same turbines, bringing customers a return on investment in one to three years – or, in some cases, even less, he said.

ExRo's generator, called the Variable Input Electrical Generator, or VIEG, uses a series of coils, balanced with a series of different magnets that can operate independently, so only a few cells are turned on at low speeds and more cells are activated at higher speeds.

The generator eliminates the need for a gear box, saving wind developers money, and has almost no cogging torque – or resistance to begin turning – at all, McDonald said, meaning that it can begin generating electricity at "near zero" wind speeds.

"It takes a little wind to turn a blade, of course," he said. "But [our generator] has almost no cogging torque at all. You could literally go and turn the shaft."

The generator also can easily be modified to match different sites, McDonald said. For example, if a site has the wind resources to accommodate 1.6 megawatts of generation capacity, and the nearest convenient wind-turbine system is 1.5 megawatts, the generator can help add the additional capacity, he said.

VIEG also comes with controls that can match production to grid demand and enable customers to preprocess the electric signal to deliver exactly what the grid is looking for, he said.

"We actually solve arguably the biggest underlying issue in wind," he said, referring to the fact that generators all move at only one speed. But nobody's stepped back and built a generator for a variable source. The fact is that one component needed a fixed prime mover and everything else has been built around that problem. ... In retrospect, it's better to fix the limitation."

ExRo is about to begin field trials with wind-developer partners, who will make side-by-side comparisons of wind turbines using conventional generators and VIEG, McDonald said. The company expects to have its first trial in place by March – with pilot projects beginning with 5 kilowatts, then scaling to 50 and 100 kilowatts – and to have its first assembly plant up and running in 18 months, he added.

"It's a pretty important stage for us," McDonald said.

The company also hopes to raise about $10 million in its Series A round of venture-capital funding after the new year, he said.

The company previously raised about $1.5 million in seed funding, which it has used for viability testing, prototyping and some patent work, and McDonald said he expects the company has enough capital left to get through the field trials.

ExRo expects to begin generating revenue in two years, he said.

Founded in 2005, ExRo has five employees – some of whom are part-time – and a number of collaborators outside of the company. The generator is based on 12 years of research by inventor and chief technology officer Jonathan Ritchey, McDonald said.

The company expects to enter the market – via a joint-venture business model – with smaller applications, including portable generators and generators for small-wind turbines with capacities in the kilowatts range, he said.

But ExRo ultimately plans to mainly target large utility-scale wind projects, where the value proposition is larger because turbines capture more wind and generate more electricity than in smaller turbines, he said. The company expects it will take "at least" two to three years to reach that market, which McDonald defines as 700 kilowatts and up.

While he didn't say how much he expects the generators to cost when they first hit the market, McDonald said they are likely to cost more than standard generators – but added that in some applications, such as in portable generators, where VIEG technology could lead to a lighter generator with increased output, the total cost of the machine might be less right away.

Based on its modeling, ExRo expects its generator to cost 20 percent cheaper to manufacture than traditional generators. Still, he cautioned, "we haven't built one the size of a truck yet."

While he also wasn't familiar with ExRo's technology specifically, Hal LaFlash, director of emerging technology policy at San Francisco-based Pacific Gas and Electric Co., said gearboxes and the inability to operate at very high and fairly low wind speeds have indeed been challenges for existing turbine technologies.

He added that a side-by-side testing of VIEG and an existing generator would be the best way to determine whether ExRo's technology can really solve those problems.

Meanwhile, Typer Tringas, a wind analyst at New Energy Finance, said the generator certainly hasn't been the key component of focus at the moment, with gearboxes and blades attracting more attention.

In any case, he said, all wind-technology startups are facing an increasingly difficult challenge of persuading a risk-averse industry to finance projects with new technology.

"Given current market conditions, capital constraints and things of that nature, we're seeing even more than normal retrenchment toward tried and true technologies," he said. "There's very high aversion to financing projects using [what they consider] untested technology, even within what you'd consider well-established turbine technologies. In the current climate, ExRo's going to be facing a very very high barrier to entry. If it's amazing, we'll see. But I'd say initially it's going to be a tough road."

FPL Group earlier this week said it would reduce its plans to add more wind-power capacity, while Spanish wind-turbine maker Gamesa said it is temporarily closing some of its factories until customers can confirm their purchase plans (see FPL Cuts Wind Power Plans and Wind Turbine Shortage Over?). BP Capital Chairmand and CEO T. Boone Pickens also is considering scaling back his planned 4-megawatt wind farm (see Knocking the Wind Out of Pickens).